Jay Walking MorsiPosted: February 24, 2013
There is plenty of criticism of President Morsi, and almost all of it deserved. Yet it all has the air of charging a lethal drunk driver with jay walking. The massive economic ills are blamed on the “revolution” and almost never on his inept leadership. This ignores the fundamental fact that growth in 2010 was 3-4 times the current growth, and in a worse global environment. Egypt’s economic problems are not ordained to be insoluble.
The collapse of the currency is not due solely to the large Current Account imbalance, but also, perhaps mostly, to the large capital outflow. That can be partly blamed on the revolution and the consequent instability. But all evidence points to an increase in the outflow since last year. More importantly, Morsi built his campaign on improving the economy by moving away from the “ills of the felool”. He even rammed through a sorry constitution by dubious means for the purely tactical goal of improving the foreign reserves. Those who had the stomach to listen to his loudly barked campaign speeches will recall that he promised a net capital inflow of $200 Billion dollars over his first term, or $50 Billion annually. Of course nothing of the sort happened. He did manage a few crumbs from his ally Qatar.
In fact, almost all of Morsi’s lurches and gyrations have had the opposite effect of increasing economic instability and hence capital outflow. Almost no attention is given to his promise; how economically illiterate it was to make it, and how inevitable that it was not kept. This, more than his gyrations into light-weight autocracy and general Ikhwan-coddling, represents the serious and present danger to Egypt and the breaking of his oath of office, reluctantly taken as it was. His appointments did little to increase confidence and hence willingness to invest in Egypt. His Prime Minister is a decent man who can only be described as “Ragel Ghalban”, with hardly any steel to make tough decisions. The recently appointed Finance Minister, Dr. Morsy Hegazy, surely “knows God”, but shows little familiarity with economic principles. With such a lot at the wheelhouse, any sensible man would reach for the life preservers.
The Egyptian opposition awaits for its version of James Carville. A country boy from Upper Egypt who can coin the native and catchy version of the “It’s the economy stupid”.